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120 S.W. 10th Avenue, Topeka, KS 66612-1597
FOR
IMMEDIATE RELEASE
March 16, 2005 |
CONTACT:
Jan Lunsford
(785) 296-3459 |
ATTORNEY
GENERAL KLINE ANNOUNCES SETTLEMENT WITH BLOCKBUSTER
OVER “NO LATE FEE” ADVERTISING
Attorney General Phill Kline today
announced that he and the Attorneys General of 46 other states
plus the District of Columbia reached agreement with
Blockbuster Inc., to settle allegations that it misled
consumers in the advertising of its “No Late Fee” program.
As part of the settlement, which
Blockbuster entered into without any admission of wrongdoing,
Blockbuster will pay the states a total of $630,000 for
attorney fees, costs of investigation and consumer protection
and Kansas will receive $8,000. The restitution period
concludes September 29, 2005.
The Attorneys General alleged that
the advertising campaign was misleading because it failed to
clearly and conspicuously disclose that if a consumer who
rented a video or game from Blockbuster kept the item out more
than seven days after its return due date, the consumer would
be charged for the selling price of the video, and that after
that, if the consumer wanted to return the video the consumer
would be charged a “restocking” fee of $1.25, or higher at
some franchise stores. The Attorneys General also alleged
there was insufficient disclosure of the fact the program was
offered only at participating stores and that some customers
of nonparticipating franchise stores thought they would not
have to pay late fees.
Blockbuster began advertising the
“End of Late Fees” and “No Late Fees” on December 15,
2004, with the program starting on January 1, 2005. The
program is available at all company-owned stores and those
franchise stores that chose to participate. In Kansas there
are 22 company-owned stores and 35 franchise stores.
“This case is important because it
reminds advertisers that they cannot use a catchy slogan or
phrase if that slogan is misleading,” Attorney General Kline
said. “Slogans can be misleading and violate the law if they
do not fully and accurately describe the complete terms and
conditions attached to the offer.”
Under the terms of the settlement,
Blockbuster has agreed that in future advertising for the
“No Late Fee” program it will:
- Not represent directly or by
implication in any of its advertising that there are no
late fees or only limited late fees unless such
representation is accompanied by and appears proximately
to a clear and conspicuous disclosure of the existence of
any charge.
- Advise of any limitation on the
stores participating in the offer.
Blockbuster also agreed that all
stores will clearly and conspicuously display Blockbuster’s
policy for return of rental product and applicable charges if
product is not returned.
For the next six months, Blockbuster
will also:
- Post a notice in each store in
multiple locations in areas reasonably calculated to
inform customers of the terms and conditions of the “No
Late Fee” program;
- Clearly and conspicuously include
the terms and conditions of the “No Late Fee” program
on policy statements that appear at the end of some of the
aisles in every store;
- Provide brochures containing the
terms and conditions of the offer in every store, which
are prominently available for customers to read at the
store and/or take home;
- Remove from its stores the current
external window signage and internal signage advertising
the “No Late Fee” program and request and recommend
that participating franchise stores do the same;
- Require any franchise store that
is not participating in the “No Late Fee” program to
remove any contrary advertising;
- Have a hyperlink on it’s website
which explains the terms and conditions of the offer; and,
- Tell consumers who are sent
written notification by Blockbuster that a rental has been
converted to a sale that to put credit back on a credit
card the card must be produced.
Blockbuster also agreed to provide a
full refund or credit to any customer of a corporate store or
a franchise store that participated in the “No Late Fee”
program equal to the selling price of any rental items
converted to a sale under the “No Late Fee” program which
rental items were not returned within 30 days from the sale
date, upon the return in good condition of the items rented.
The restitution shall be on a one-time per customer basis but
will cover all items rented which were converted to a sale
before the customer learned on the first rental transaction
that a sale would occur. If the customer already returned the
item but paid a “restocking” fee, the customer can obtain
a refund of the “restocking” fee. A request for
restitution must have been or be made in writing and allege a
failure to understand the “No Late Fee” program.
Blockbuster customers who believe
they are entitled to a refund because they did not understand
the program may get a refund form at a corporate-owned or
participating franchise store. Blockbuster has asked its
personnel and suggested to franchise stores that requests be
resolved on the spot if possible. Customers may also sent
their request to Blockbuster, 1201 Elm Street, Suite 2100,
Dallas, TX 75270, Attention: Steve Krumholz, by April 28,
2005, or if after that, within seven days of first discovering
an expenditure in addition to the initial rental sum is or was
required.
Customers who rented from a
non-participating franchise store which did not have signs
saying it was not participating in the “No Late Fee”
program, who allege a lack of understanding and were charged a
late fee beyond the initial rental fee may ask for a coupon
request form at the store. Customers may send the form to
Blockbuster at the above address to receive rental coupons
equal to the number of rented movies on which such charges
were assessed. Blockbuster has requested that these stores
resolve complaints on the spot if possible. Eligible customers
are those who rented product after December 31, 2004 and prior
to March 29, 2005. Refund coupons only apply to late fees on
items in the initial rental transaction after December 31,
2004. Requests must be made by April 28, 2005, or if after
that, within seven days of first discovering that late fees
were being charged.
In addition, customers seeking either
a refund form or a coupon request form may also contact the
Consumer Protection Division of the office of Attorney General
Kline. The toll-free Consumer Hotline number is
1-800-432-2310.
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